Stephen Elop: “Nokia, our platform is burning”

When the ship is sinking there is no
time for formalities and you have to be brutally honest and fast to
save it or to save the people on board. That is the exact approach
taken by Stephen Elop, ex-Microsoft employee and current CEO of Nokia
in a memo to Nokia staff: “We too, are standing on a "burning
platform," and we must decide how we are going to change our
behaviour.”

That is just one quote from an honest
introspection about Nokia and its place in the mobile industry. To
stress his point Elop repeats it over and over again: “I have
learned that we are standing on a burning platform. And, we have more
than one explosion - we have multiple points of scorching heat that
are fuelling a blazing fire around us.”

But the much needed change doesn't seem
to be MeeGo either - rather everything else ranging from Windows
Phone 7 to Android. Why not MeeGo? “We thought MeeGo would be a
platform for winning high-end smartphones. However, at this rate, by
the end of 2011, we might have only one MeeGo product in the market,”
Elop answers this question quite frankly.

But it's not only the high-end segment
that is in serious trouble – Nokia's CEO talks about the invasion
of Android in mid-range phones, while “at the lower-end price
range, Chinese OEMs are cranking out a device much faster than, as
one Nokia employee said only partially in jest, "the time that
it takes us to polish a PowerPoint presentation."”

This eloquent presentation is full of
analogies that look aimed to inspire Nokia employees ahead of what
seems to be a huge shakeup. If Symbian is burning and MeeGo is far
from ready for primetime, we cannot see any other path but one of a
revolutionary change for Nokia such as adopting a new operating
system.

The last two quarters marked a
nose-dive in market share for Nokia smartphones, which lost 11%, down
to 28% from 39% at the end of Q2, more than any manufacturer we can
think of in such a short period of time. As Elop mentions, rating
agencies such as Standard & Poor's will be re-evaluating Nokia's
outlooks soon and a downgrade in rating might mark the beginning of a
bigger slip. We can still remember Motorola's downfall, when the
company plunged from the world's second manufacturer to ninth in just
four years, but hopefully change is coming for the Finns. Whatever it
is, February 11th seems to be one of the most decisive
Capital Markets Day events for Nokia so far. Check out the full text
of Elop's memo as obtained by Engadget below:

"Hello there,

There is a pertinent story about a man
who was working on an oil platform in the North Sea. He woke up one
night from a loud explosion, which suddenly set his entire oil
platform on fire. In mere moments, he was surrounded by flames.
Through the smoke and heat, he barely made his way out of the chaos
to the platform's edge. When he looked down over the edge, all he
could see were the dark, cold, foreboding Atlantic waters.

As the fire approached him, the man had
mere seconds to react. He could stand on the platform, and inevitably
be consumed by the burning flames. Or, he could plunge 30 meters in
to the freezing waters. The man was standing upon a "burning
platform," and he needed to make a choice.

He decided to jump. It was unexpected.
In ordinary circumstances, the man would never consider plunging into
icy waters. But these were not ordinary times - his platform was on
fire. The man survived the fall and the waters. After he was rescued,
he noted that a "burning platform" caused a radical change
in his behaviour.

We too, are standing on a "burning
platform," and we must decide how we are going to change our
behaviour.

Over the past few months, I've shared
with you what I've heard from our shareholders, operators,
developers, suppliers and from you. Today, I'm going to share what
I've learned and what I have come to believe.

I have learned that we are standing on
a burning platform.

And, we have more than one explosion -
we have multiple points of scorching heat that are fuelling a blazing
fire around us.

For example, there is intense heat
coming from our competitors, more rapidly than we ever expected.
Apple disrupted the market by redefining the smartphone and
attracting developers to a closed, but very powerful ecosystem.

In 2008, Apple's market share in the
$300+ price range was 25 percent; by 2010 it escalated to 61 percent.
They are enjoying a tremendous growth trajectory with a 78 percent
earnings growth year over year in Q4 2010. Apple demonstrated that if
designed well, consumers would buy a high-priced phone with a great
experience and developers would build applications. They changed the
game, and today, Apple owns the high-end range.

And then, there is Android. In about
two years, Android created a platform that attracts application
developers, service providers and hardware manufacturers. Android
came in at the high-end, they are now winning the mid-range, and
quickly they are going downstream to phones under €100. Google has
become a gravitational force, drawing much of the industry's
innovation to its core.

Let's not forget about the low-end
price range. In 2008, MediaTek supplied complete reference designs
for phone chipsets, which enabled manufacturers in the Shenzhen
region of China to produce phones at an unbelievable pace. By some
accounts, this ecosystem now produces more than one third of the
phones sold globally - taking share from us in emerging markets.

While competitors poured flames on our
market share, what happened at Nokia? We fell behind, we missed big
trends, and we lost time. At that time, we thought we were making the
right decisions; but, with the benefit of hindsight, we now find
ourselves years behind.

The first iPhone shipped in 2007, and
we still don't have a product that is close to their experience.
Android came on the scene just over 2 years ago, and this week they
took our leadership position in smartphone volumes. Unbelievable.

We have some brilliant sources of
innovation inside Nokia, but we are not bringing it to market fast
enough. We thought MeeGo would be a platform for winning high-end
smartphones. However, at this rate, by the end of 2011, we might have
only one MeeGo product in the market.

At the midrange, we have Symbian. It
has proven to be non-competitive in leading markets like North
America. Additionally, Symbian is proving to be an increasingly
difficult environment in which to develop to meet the continuously
expanding consumer requirements, leading to slowness in product
development and also creating a disadvantage when we seek to take
advantage of new hardware platforms. As a result, if we continue like
before, we will get further and further behind, while our competitors
advance further and further ahead.

At the lower-end price range, Chinese
OEMs are cranking out a device much faster than, as one Nokia
employee said only partially in jest, "the time that it takes us
to polish a PowerPoint presentation." They are fast, they are
cheap, and they are challenging us.

And the truly perplexing aspect is that
we're not even fighting with the right weapons. We are still too
often trying to approach each price range on a device-to-device
basis.

The battle of devices has now become a
war of ecosystems, where ecosystems include not only the hardware and
software of the device, but developers, applications, ecommerce,
advertising, search, social applications, location-based services,
unified communications and many other things. Our competitors aren't
taking our market share with devices; they are taking our market
share with an entire ecosystem. This means we're going to have to
decide how we either build, catalyse or join an ecosystem.

This is one of the decisions we need to
make. In the meantime, we've lost market share, we've lost mind share
and we've lost time.

On Tuesday, Standard & Poor's
informed that they will put our A long term and A-1 short term
ratings on negative credit watch. This is a similar rating action to
the one that Moody's took last week. Basically it means that during
the next few weeks they will make an analysis of Nokia, and decide on
a possible credit rating downgrade. Why are these credit agencies
contemplating these changes? Because they are concerned about our
competitiveness.

Consumer preference for Nokia declined
worldwide. In the UK, our brand preference has slipped to 20 percent,
which is 8 percent lower than last year. That means only 1 out of 5
people in the UK prefer Nokia to other brands. It's also down in the
other markets, which are traditionally our strongholds: Russia,
Germany, Indonesia, UAE, and on and on and on.

How did we get to this point? Why did
we fall behind when the world around us evolved?

This is what I have been trying to
understand. I believe at least some of it has been due to our
attitude inside Nokia. We poured gasoline on our own burning
platform. I believe we have lacked accountability and leadership to
align and direct the company through these disruptive times. We had a
series of misses. We haven't been delivering innovation fast enough.
We're not collaborating internally.

Nokia, our platform is burning.

We are working on a path forward -- a
path to rebuild our market leadership. When we share the new strategy
on February 11, it will be a huge effort to transform our company.
But, I believe that together, we can face the challenges ahead of us.
Together, we can choose to define our future.

The burning platform, upon which the
man found himself, caused the man to shift his behaviour, and take a
bold and brave step into an uncertain future. He was able to tell his
story. Now, we have a great opportunity to do the same.

2.hps (unregistered)

3.gogogogo (unregistered)

i like elop attitude, not like the nokia fan boy and symbian advocate who always think that OS is perfect. if it perfect nokia will not sink,thats it!
the nokia boss will not said "Symbian is proving to be an increasingly difficult environment in which to develop to meet the continuously expanding consumer requirements," if that OS mean to be good,cool or great everybody will not want android or iOS in their phone
he will not admit it if that symbian is a perfect OS. it fail to be a smartphone OS from the start.
nokia cannot grow because that symbian is their own obstacle.
apple only need 4 years to bring evolution in smartphone industry,not with 20 new phone a year but only 1 smartphone. and they do it without SDcard and megapixel camera and replacable battery.
while android needs only 2 years to change every phone into a high tech touchscreen phone.
if iphone not appear 4 years ago and google not decided to build their smartphone OS 2 years ago, i believe today in 2011 we still proud with our lovely keypad phone,we still playing snake, sms and call only, brag about camera megapixel, never hope to see much innovation, all we care just megapixel battle, no magnetic compass, no free map (ovi map used to be expensive u know?), no compatition mean no innovation, etc
for me, symbian have been a huge boulder for mankind to jump into higher technology.
dont be a fanboy cause im not, just think with your clear mind, everything is there.
i dont have an iphone nor an android, just cheap proprietary phone its a huawei. im not a fan of any brand and will not gain anything from any brand if i said good thing bout them,
i dont have any relation with any mobile manufacture just want you all to wake up from advocating something bad, and that OS already prevent us to accelerate on technology.
today elop say that to us, and finally someone from nokia awake and realize that deformity OS is not that smart and he realize it had been wrong to said symbian is the right platform for smartphone OS and now he also realize that deformity OS have been causing them sinking.
dont u the symbian fanboy ever feel guilty for suggesting a flawed OS to your friend or family??? i did.

If Nokia decides to do something totally out-of-the-box and create their own new OS, that'd be interesting enough to pry some market share back from Android and Apple I would think. Apple is known for innovation, and Android is gaining that reputation as well fairly steadily. Nokia could try its hand at OS-building and see how they do. It's certainly not because they can't make a decent piece of equipment. Nokia phones are pretty reliable.

I don't know but it seems like Elop is just trying to get Windows Mobile on a Nokia handset. He did work for Microsoft after all. Not saying that he is trying to sabotage Nokia's Symbian^3 and Meego handsets but it's hard to compete in the biggest smartphone market in the world without having any subsidized phones on any of the four major carriers in the U.S. The general public will not purchase an unsubsidized handset when they can purchase a subsidized handset just by signing on the dotted line. Just take a look at the X7 that phone could of possibly done well in the U.S market but we'll never know.

as you may see I'm talking about a company that makes hardware adapting new software available, and she/he comes with something related with a company that makes software and gets the hardware for it...

9.Max (unregistered)

After read the whole memo, got a feeling that:
1. Symbian will be faded out of Nokia’s picture in a very short period of time.
2. Meego may not be released after all due to its slow product development.
3. Nokia may focus on more low-end products to meet the market demand.
4. Nokia realize that Apple already has an upper-hand in the smartphone market. They may focus on how to catch up with Android in term of sale volume.
Well, good luck Nokia. Your platform is not just burning; it has already burned to the ground. Nobody else is willing to invest in Symbian, time and $. Time to leave the past behind and move forward

The thing that really struck me in this article is that a group of cheap, essentially no name Chinese manufacturers now sell about a third of the worlds cell phones. I have heard that it's not really companies like ZTE and Huawei, but at least a dozen others who operate in a much different manner (quicker, cheaper, not much research, etc) but are putting out highly capable and reliable basic phones. Well, between ZTE and Huawei and the others, some are going to take off and start making a lot capable and complex phones very rapidly and probably shake up the entire industry in just a few years and really put a hurt on some of the old standbys like Nokia and Motorola and Sony Ericsson. I have a feeling we're all going to be learning to pronounce some new names soon.

19.rob (unregistered)

ive had the n900 for a year now and its a darn good phone. ive tried to replace it several times. HD2 from tmobile. the galaxy S captivate. the DROID X...
(now waiting for the motorola Atrix) the reason i kept trying to replace the n900 came down to the "ecosystem" Google Apps and navigation Apps. period. without a partnership with a commercially viable developer base nokia will never advance.
remember i said "commercially viable developer base" im not knocking any of the developers that have made nokia what it was at its height.

ive installed meego OS on my handset in the past. its cute. but not going to be any different than maemo5 OS that is currently running on my N900.

I run ubuntu on my home computer. Jolicloud on my netbook. so, ive done my share of hacking my systems to do what i want them to do.
but i am truly tired of hacking and tweaking my nokia n900 phone. So, i believe nokia will not throw all its eggs in one basket by choosing to partner up with just one operating system.

i see them offering Android and also Windows mobile 7. just like samsung, LG and others. Like so many post about how great nokia makes their phones. i know i would love android on my n900. nokia phones would suddenly be selling side by side with every other phone availale in all the major carriers stores.
right now consumers are going into stores and buying.... Android handsets. not necessarily a motorola or samsung etc.. phone .. but android .now, if they see a sleek pretty nokia phone right next to the others....... then all of a sudden, the consumer will remember back to one of their first phones and remember it was a Nokia and think about what a great phone it was. Then, im sure nokias marketshare will rise instantly.

22.nokfan (unregistered)

Dear Mr. Elop,

It is nice to see someone from Nokia finally responding to the suicidal tendencies that you organization has been displaying.
From the symbian debacle to ovi bomb to maemo 5 treason, Nokia has been on a backward path so clear to consumers, it's sad it took Nokia soo long to realise.
As a long time Nokia customer (8250 to N900), it has been sad to see the decline of a great brand to the depths it is in now.
a few words of advice;
1) listen - customers are not always right, but a general idea of where you are going can be garnered from the opinions voiced.

2) answer - customers like feedback. especially the devel crowd.

3) abandonment - when Nokia threw the Maemo 5 crowd away like a soiled tissue, it hurt. doesn't actually bode well for a symbiotic relationship. you should have corrected that.

4) Apple - most of your clientele hate apple and what it stands for. not all smartphones need to be dumbed down to work. Use a N900 for a few days, then go back to whatever piece of plastic you're used to. even with all the shortcomings, i'm quite sure you will see what Nokia has missed. and why the brightest are choosing to leave.

5) Time - You are only as good as your last device. If that needs explaining, you don't deserve your paycheck.

6) Meego - even with the funny name, it gives back to the people what they need. a sense of control over a piece of tech that cost them a sizeable chunk of their salary opposed to a stupid corporation telling us what we need. so go ahead with it and make it the best it can be with the paying customers in mind rather than making a quick buck. you'll see your profits soar..

Humble opinion of a heartsick Nokia fan who has seen a fav digging itself further and further into it's own grave.

23.JV (unregistered)

As I was telling my good fried at Nokia, who happens to head up one of their support centers, the only and best option for Nokia today is to embrace Android and run with it.

Look what it did for Motorola, who were once, in the not too distant past, almost on the verge of going down.

Anyway, with the global marketing and distribution muscle, and the established brand recognition, particularly in this mobile phone space, Nokia will take the market by storm if they embrace Android and dedicate their resources to just focus on Android for at least the next 3 years. Later, they can go off and play with their pet projects like MAEMO, etc.

Right Nokia needs to stop bleeding and start to regain their market position. Else, Nokia's downward market momentum will pick up, and before they realize it, Nokia would be history. The management needs to stabilize Nokia and start to chart a profitable course immediately. This will not only get the shareholders off their backs, but will duly check their loss of market share and share value. This will also give them a breather to concentrate and strategize on their product mix for now and for the future.

Getting in bed with Microsoft is, in my opinion, the most flippant move and strategy of all. Just because you happen to have come from an organization, no matter how big they are, is not reason enough to get back in bed with them, if they are not the right fit for you. This is not the time to play favorites with your old colleagues or score browny points with them; surely not when your future and the life of a company depends on it. This is no time for gambles, risks or games . . . If you are hard pressed to come up with ideas of survival to rebound back, you can borrow from others who have survived from a similar situation - read Motorola!

Getting back to what Nokia can do:
For starters, sit down with Google, probably with Rich Miner himself, co-founder of Android, who came to Google with the acquisition of Android. Initially, he helped lead the development of the Android platform and ecosystem at Google. Prior to Android, Rich was a Vice President at Orange, where he led R&D activities in North America and other activities. Rich came to Orange through the acquisition of Wildfire, as their co-founder, which developed a voice-based personal assistant.

Today, Rich is part of the Google Ventures Team. He sits in a perfect position to help Nokia and he has the market, business, and technical experience to go with it.

After entering into a strategic understanding with Google, suggest Nokia set up shop at Google, maybe at their StartUp Lab or wherever else is most appropriate, and get their nose to the grind to:
- Tweak Android for existing Nokia devices,
- Customize Android for new Nokia smart phones, and
- Leverage and utilize all of Google resources available to become the most successful Android partner.
. . .a huge opportunity here!

All content (phone reviews, news, specs, info), design and layouts are Copyright 2001-2015 phoneArena.com. All rights reserved. Reproduction in whole or in part or in any form or medium without written permission is prohibited! Privacy . Terms of use . Cookies . Team